In the eCommerce industry, the processing of shipping and fulfilling a customer’s order can be quite tricky. As such, businesses are constantly looking for ways to streamline their supply chain and improve customer feedback and satisfaction.
Enter 3PL fulfillment. With the help of a third-party logistics (3PL) provider, retailers can outsource these processes and focus on growing their business. As simple as it may seem, there are aspects you need to understand to streamline your delivery process effectively.
So, what is 3PL fulfillment, and how does it work? In this blog post, we’ll break down the basics and types of 3PL fulfillment and the things to consider before using this service.
What Is 3PL Fulfillment?
Third-party or 3PL fulfillment is a comprehensive logistics solution for businesses looking to outsource their warehousing and order fulfillment needs. It involves using a separate third-party provider to store, package, and ship products for your business.
This arrangement allows companies to focus more on other areas, such as product branding and improvement, marketing, and customer service, while still receiving the necessary support to keep their business running efficiently.
What is the difference between 3PL and 4PL?
3PL (Third Party Logistics) is a logistics service provider specializing in handling business delivery services, such as warehousing and transportation. These services are usually limited in scope, but they can provide businesses with valuable cost savings and operational efficiencies.
On the other hand, 4PL (Fourth Party Logistics) integrates different logistics services from multiple providers into an integrated supply chain solution. 4PLs are often considered the “glue” in the supply chain, as they work with clients and 3PLs alike to create efficient solutions for managing supply chains.
They provide global visibility and control across all supply chain elements, including inventory management, transportation optimization, and forecasting.
3PLs are an excellent option for businesses looking for cost savings and operational efficiencies, while 4PLs are a perfect choice for those who need more sophisticated global visibility and control across their supply chains. Both logistics services provide valuable solutions to help businesses achieve their goals.
The 3PL Fulfillment Process
When businesses hire the services of a third-party logistics provider to handle their eCommerce fulfillment process, specific steps are taken to fulfill an order. Below is a detailed explanation of the 3pl order fulfillment process.
Inventory management with 3PL
3PL fulfillment inventory management is a key element of successful supply chain management. The process involves identifying, tracking, and managing the movement of goods from the point of sale to delivery, making it the first step in the fulfillment process.
It includes selecting 3PLs and warehousing locations, managing transport carriers, maintaining accurate inventory records, and monitoring order fulfillment. An effective 3PL fulfillment inventory management enables organizations to reduce overhead costs, increase operational efficiency, and maximize customer satisfaction.
Utilizing a third-party provider can help alleviate the burden of logistics operations to focus on core business functions that create long-term value for the organization. Furthermore, it gives eCommerce companies and businesses access to specialized expertise, advanced technology and solutions, and streamlined processes to handle the complexities of global distribution.
Warehousing and distribution solutions
Once inventory management is handled, the next step is to have efficient warehousing and distribution solutions for customers’ orders. Warehousing is an essential aspect of the supply chain. It affects everything from production and properly managing inventory with material handling for 3PLs to delivering customers’ orders on time.
Keeping track of inventory and having effective order management to maximize efficiency and profit can be challenging. However, with the help of a third-party logistics provider, several solutions can be developed or adopted to solve distribution issues before packages are shipped.
Order processing and fulfillment
When orders are made through your sales channel or online store, orders are immediately processed to begin the order fulfillment process. With the help of a third-party logistics company, all orders will be double and triple-checked for errors to ensure all details comply with the 3PL process.
To properly manage all orders, effectively processing orders is crucial in the fulfillment process. As such, third-party logistics businesses use cutting-edge technology for warehouse management to process all orders, thereby automating most transactions for your different sales channels to improve multi-channel fulfillment.
Transportation and logistics management
The 3PL fulfillment services delivery and shipping process is essential to any eCommerce business. It ensures that orders are delivered to customers on time, in good condition, and with reliable customer service.
By using a 3PL provider for order fulfillment, businesses can save time, money, and resources and make last mile deliveries more efficient while providing the best customer experience possible. A successful 3PL delivery and shipping process involves careful planning, reliable technology, and effective logistics management.
Detrack can offer great benefits to 3PL logistics companies, read more about it here: https://www.detrack.com/industries/logistics-and-3pl/
Types Of 3PL Fulfillment Services
There are several types of third-party logistics fulfillment services depending on the needs of the eCommerce business. We’ve explained them below.
Full-Service
Full-service 3PL companies provide integrated logistics services, such as transportation and warehousing. They can provide various related services, including packaging, inventory management, order fulfillment, reverse logistics, and customer service.
By outsourcing these tasks to experienced professionals who specialize in the supply chain industry, organizations can benefit from improved operational efficiency, cost savings, and better customer service.
With a full-service 3PL company, businesses can use the latest technology to gain visibility into their supply chain operations. This increased visibility allows them to identify areas for improvement and make adjustments as needed to optimize performance.
3PL Warehousing
Third-party logistics (3PL) warehousing is an integral part of the 3PL services offered by 3PL companies. 3PL warehousing gives businesses essential advantages, such as cost savings, flexibility, scalability, and improved order fulfillment efficiency.
With a 3PL warehouse, businesses can store their products in offsite facilities. This eliminates the need to invest in their warehouses and the associated costs, such as rent, electricity, staff wages, and other operational costs. 3PL warehousing also benefits businesses by providing a means of scaling up or down when needed.
3PL companies offer short-term or long-term storage solutions that easily adjust to business needs. In addition, 3PL warehouses increase order fulfillment efficiency by automating processes such as picking, packing, and shipping orders. This allows businesses to reduce inventory management costs and staffing warehouse operations.
3PL Transportation Companies
3PL transportation companies are an integral part of the supply chain. They provide services to fulfill customer needs for freight and warehousing, cross-docking, and other specialized logistics solutions. The primary goal of 3PLs is to reduce customer costs by providing efficient, cost-effective solutions.
3PLs generally have extensive networks of transportation and warehousing facilities that enable them to provide solutions across a wide area. With their ability to take on various tasks, 3PLs can help companies streamline their operations, lower costs, and become more agile in meeting customer demands.
Things to Consider Before Hiring 3PL Fulfillment
Third-party logistics companies can significantly impact your company, so finding the right partner is essential. Here are a few things to consider.
Cost efficiency
The cost involved is one of the first factors you need to consider when hiring a third-party fulfillment partner. Are they cost-efficient? Do they offer flexible pricing? These are questions to ask as you don’t want a situation where your shipping costs increase.
Additionally, a cost-efficient fulfillment partner will give your business more room to grow by reducing overhead costs.
Expertise and resources
It’s essential to choose a third-party company that meets your needs because most of them have an area of expertise and different resources to meet the needs. It can be based on the type of industry, logistics, or mode of transportation. So, when analyzing the expertise of a 3PL company that can be your partner, it’s best to ensure they can handle your needs adequately.
Geographic reach
Consider hiring a partner with several fulfillment centers if your customers are nationwide or state. Such partners have a wider geographical reach and can efficiently deliver your customer’s packages anywhere in the country without delay.
Risk mitigation
The logistics industry is constantly changing. The rules and regulations aren’t any different. So finding a 3PL fulfillment partner with a good risk mitigation record is crucial. Risk mitigation involves reducing the risk involved in the fulfillment process. They do so in areas like management, fulfillment centers, and warehousing.
As daunting as the task may seem, finding a 3PL fulfillment partner is vital in taking your business to the next level.
Detrack can provide a seamless delivery experience for 3PL providers
The 3PL fulfillment process is a great way to streamline your business operation and save on costs. It’s essential to partner with a reputable and experienced 3PL provider to ensure your products are appropriately handled and shipped promptly.
For 3PL providers looking to scale up their business, Detrack provides cutting-edge features that can put you ahead of your competition. Try Detrack Today to experience our delivery management software with fleet management, seamless integration to your systems, and real-time tracking of packages and drivers.
3PL Fulfillment Process FAQs
How can 3PL help small businesses?
They help small businesses streamline their delivery operations, giving them to focus on other growth areas.
Can I customize packaging and branding with 3PL?
Most 3PL have standard boxes and also offer custom packaging. If you have yours, they will use them.
What industries can benefit from 3PL fulfillment?
Several industries, including eCommerce, large and small retailers, restaurant and food, manufacturing, pharmaceutical, and cosmetics.
What are the potential drawbacks of using a 3PL provider?
One of the significant drawbacks of 3PL is the loss of delivery control. The rising cost and confidentiality breaches are also major issues.
How long does it take to integrate a 3PL provider?
The timing varies depending on the type of integration and the provider’s expertise.
How do I measure the success of my 3PL partnership?
Customer feedback and ratings are the fastest ways to measure your 3PL partnership success.
Are there any specific legal considerations when using a 3PL provider?
Insurance coverage should be considered.
What is the average cost of 3PL fulfillment services?
Depending on several factors, it typically ranges from $3-$17 per order.
